Trade deal to boost Turkey-UK strategic partnership: British envoy
SERKAN DEMİRTAŞ - ANKARA
A free trade deal (FTA) signed between Turkey and the United Kingdom will help the two allied nations to create a strategic partnership with effects beyond trade and economy, the British envoy to Ankara has said, informing that Ankara and London have also agreed to negotiate on a more ambitious and comprehensive agreement.
“All those factors strengthen bilateral relations, and other things being equal, contribute towards creating a strategic, as opposed to transactional, partnership. So the consequences of our new FTA and the phase 2 FTA in future won’t stop at trade or the economy, although they will, self-evidently, be very important for them,” British Ambassador Sir Dominick Chilcott has told the Hürriyet Daily News in an exclusive interview.
The FTA between the two countries was signed on the last days of 2020, immediately after the U.K. and the European Union compromised on a trade and cooperation agreement to avoid a no-deal Brexit.
Turkey and the U.K. have signed an important tariff-free trade deal. I understand that talks will continue for a more comprehensive trade deal between the two countries. Could you please provide more details about what we have signed and what we will presumably sign in the future?
We have signed a Free Trade Agreement safeguarding a very big trading relationship, which the U.K.’s departure from the EU and the EU’s trade agreements with Turkey could have endangered. We have avoided that with our new FTA, which will ensure the continued tariff-free flow of goods and protects vital U.K.-Turkey supply chains in the automotive and other manufacturing sectors.
The U.K.-Turkey FTA, as far as possible, takes as its model the arrangements in the EU-Turkey Customs Union and preferential EU agreements with Turkey on coal, steel and agriculture. We have transferred these into the bilateral trade agreement between the U.K. and Turkey. By bringing together the provisions of a number of distinct EU-Turkey arrangements into one modernized FTA, we have created a simpler instrument that better reflects our modern trading practices and is easier to understand.
This agreement is very important for preserving the trade flows between our two countries, which have grown 70 percent over the last decade, and in 2019 before the COVID-19 restrictions, were worth nearly 19 billion pounds. Without the new FTA, exporters on both sides would have had to pay additional tariffs, and some trade could have become uncompetitive as a result. As the trade minister, Mrs. Pekcan, emphasized during the FTA signing ceremony, according to Turkish government figures, if we had not got this agreement, some 75 percent of Turkish exports would have had to pay some additional tariffs, suffering up to $2.4 billion losses.
The agreement is the product of extensive trade talks over three years between Turkish and British officials and ministers. The two sides worked very closely with the common aim of ensuring that our strong trading relationship could continue after the U.K. was no longer a party to the EU’s agreements with Turkey. Our achievement is largely thanks to the political determination both in the U.K. and Turkey to ensure that there was, as far as possible, a smooth transition into our new relationship in 2021.
What areas do you think the phase-2 FTA will cover? Will agricultural products and services be included?
This trade agreement is indeed the first step – what some are calling phase 1; both the U.K. and Turkey want to work towards a more comprehensive and ambitious FTA, a phase-2 FTA if you like, in the future. Indeed our ‘phase 1’ FTA contains a clause that envisages a review of the FTA leading to talks beginning within two years with the aim of expanding the FTA to develop our trade in new sectors.
The review will include, among other areas, trade in agricultural goods, trade in services, investment and the digital economy. Mrs. Pekcan and British Trade Secretary Liz Truss, both said that they wanted a more comprehensive FTA at the signing ceremony last month. Businesses on both sides are keen to add new areas to the agreement and develop our bilateral trade further. So, there is plenty of political will and desire from business to advance to a phase 2 comprehensive FTA in due course.
In light of all these developments, what are the short and long-term targets in terms of trade volume?
The short-term target has been to safeguard our current trade. I believe - by signing the bilateral FTA - we will be able to do so once we get beyond the COVID-19 restrictions on the economy. It is still early to talk about long-term targets, but the 70 percent increase in our bilateral trade over the last decade gives us some clues about the potential of this trade relationship.
In addition, as we have seen during our trade talks over the last three years, both sides – governments and business circles – unsurprisingly want to grow our bilateral trade even further, which will create more jobs and prosperity in both our countries. As we recover from the economic setbacks caused by COVID-19, we believe there is scope to significantly grow our bilateral trade in the short to medium term. A trade volume target of 21 billion pounds within the next three to four years does not seem unrealistic, and we could do even better than that depending on how quickly we can move to a phase-2 FTA.
The Turkish nationals will no longer be able to benefit from the Ankara Agreement. I believe they will be subject to a newly introduced points-based immigration system. What would be your call to the Turkish nationals planning to apply? How many Turks have benefited from it and started a business in the U.K.?
You are right. The U.K.’s departure from the European Union means the end of free movement to the U.K. for EEA nationals. In line with that, for Turkey, it marks the end of the European Communities Association Agreement (ECAA) route, also known as the Ankara Agreement, to the U.K. Tens of thousands of Turkish nationals have benefited from this route over their lifetime, many of whom have played an important role in the economic and social fabric of the U.K.
The change will not greatly affect those Turkish nationals who applied to the ECAA route before it closed. Turkish nationals and their family members who have existing permission to stay in the U.K. - as an ECAA worker, businessperson or family member - will have their position preserved. They will be able to continue to apply for extensions of permission to stay in the U.K. in a similar manner as they would have done under the ECAA route, and applications to do so will remain free of charge.
In place of the ECAA, the U.K. has introduced, what we believe is, a fairer, global, points-based immigration system. The new system assesses applicants to work in the U.K. on the basis of the skills they offer, rather than their nationality. That means that, from now on, Turks, with the right skills and talent, will have the same opportunity to work in the U.K. as Americans, Germans, Australians or people from other countries.
We are well aware of the important economic and cultural contribution that the Turkish community in the U.K. makes, and the benefits we get from our strong people-to-people ties. The end of the ECAA route for new applicants and the introduction of the points-based immigration system is a big change for Turkish nationals. But I hope that Turks, with the right skills and experience for the U.K. economy, will continue to wish to find work in the U.K.
How would you describe the political significance of the deal signed between the two countries? How would this new era affect our geopolitical partnerships and strategic links?
With the U.K. being Turkey’s second-biggest export market, trade is a very important component of our relations. So, reaching a new trade deal, as the U.K. leaves the EU, is a highly significant development. As I said earlier, trade creates jobs and prosperity in both our countries. It also leads to more people from our two countries getting to know one another. It provides a rationale for more flights, better people-to-people links and supports increased tourism.
Crucially, it also engenders mutual confidence, understanding and respect, and a greater sense of common purpose. All those factors strengthen bilateral relations, and other things being equal, contribute towards creating a strategic, as opposed to transactional, partnership. So, the consequences of our new FTA and the phase-2 FTA in the future won’t stop at trade or the economy, although they will, self-evidently, be very important for them.
One of the big strategic issues for our times is calibrating relations with China. The COVID-19 pandemic, in its early months, exposed our vulnerability to being dependent on Chinese manufacturing for certain key items like protective clothing. The U.K., like many countries, needs to find suppliers in many different countries, and this, combined with the new FTA, creates an opportunity for Turkey and British-Turkish trade and investment. I also hope that we’ll see increased collaboration between British and Turkish companies in the defense sector, which as two NATO allies should be a natural reflex and obviously has strategic value.
In addition to the COVID-19 pandemic, perhaps the most urgent global challenge we face is climate change. In life sciences and medical technologies, as well as, in ‘green growth and clean energy,’ our two countries have much to offer one another. A close partnership on those subjects could also feel strategic. And then there is the conundrum of artificial intelligence and big data, both of which could be a boon to our societies, if well regulated, and a big headache, if not.
But we shouldn’t forget about the existing most prominent sectors in our trading relationship such as automotive, high-tech, textiles, electronics and metals. All of them will continue to be an important part of our economic relationship, supporting jobs and growth in both our countries. I believe Turkey and the U.K. will also continue to collaborate together in projects in third countries, particularly in the infrastructure sector, supported by 3 billion pounds of the U.K. Export Finance available for projects that have a minimum of 20 percent of their content sourced from the U.K.
Turkey and the U.K. are now both non-EU NATO nations. The U.K. left the EU, and Turkey has difficulties in its ties with Europe. But their close relationship with Europe remains the same. How would you characterize the new era from this perspective?
I don’t think our relations with Europe are exactly the same. The U.K. has chosen to leave while Turkey is a candidate to join, as well as, is in a customs union relationship with the EU. Turkey’s relationship with the EU should over time, actually becoming closer than the U.K.’s as Turkey is, in theory, is on a path to integration with the EU while we in the U.K., although highly aligned to the EU across the board, are emphasizing our newfound independence from it.
At the same time, the U.K. and Turkey do have much in common. We are located in the same region of the world, albeit at different ends of it. We could be described as the northwest and southeast bookends of the EU. We both have a strong interest in having a close, cooperative relationship with the bloc. For both of us, the EU is our biggest trading partner. But instinctively, we both also look beyond the EU to other regions of the world where we have historic ties. We both retain an ability to act independently in international affairs, where necessary. As allies in NATO, founder members of the Council of Europe and G20 economies, we belong to many of the most important global clubs. We are also trading nations that want an open world economy.
Turkey’s geography, however, means it faces difficulties that Britain does not. Being an island nation in the north Atlantic has perhaps been Britain’s biggest defensive asset over the years. A stable, confident, prosperous Turkey plays a hugely important role in absorbing a lot of the instability that is a consequence of the civil wars in Syria and Afghanistan and problems in other countries to its south and east. By doing so, Turkey acts as Europe’s shield against irregular migration and violent extremism, to mention just two threats. The U.K.’s strategic appreciation of Turkey very much takes these factors into account and underpins our wish to develop our cooperation further with Turkey in all fields.
Finally, as the EU-U.K. deal is complete and the U.K. is officially out of the EU, what would be the immediate priority of the U.K. for the new period ahead?
Like pretty much everywhere else, our immediate priority is to tackle the COVID-19 pandemic. The U.K. has gone back into lockdown, and the pressure on our hospitals is as bad as it has ever been. But the good news on the horizon is that we have begun to vaccinate the most vulnerable sections of our population. It seems that the U.K.’s science will play a big part in solving the pandemic globally. The U.K. has also pledged 500 million pounds to provide vaccines for developing countries. And we have proposals for better international cooperation to defeat future pandemics, which we hope will be widely adopted.
At the same time, we look forward to our economy recovering this year. We aim, to use a rather hackneyed phrase, to build back better by stimulating greener, more climate-friendly growth. The U.K. holds the presidency of the G7 group of the world’s most developed nations this year. We will be encouraging a similar green approach to economic policymaking from our G7 partners, as well as urging them to keep international trade flowing and avoid protectionism. In November, the U.K. will host the COP26 climate meeting, where we expect nations to make new and more ambitious commitments to reduce greenhouse gas emissions. The U.K.’s long-term target is to be carbon neutral by 2050; our medium-term aim is to reduce emissions by 68 percent by 2030.
In this region, as one of Cyprus’ guarantor powers, our immediate foreign policy priority will be to support the U.N. secretary general’s efforts to resolve the island’s division in a manner that satisfies all Cypriots. We hope all parties will approach the issue in a problem-solving frame of mind, prepared to be flexible and to compromise in the interests of reaching a settlement. If a settlement can be achieved, the prospects for cooperation rather than confrontation in the eastern Mediterranean and for Turkey’s relations with Europe would be transformed for the better. It won’t be easy, of course, but the prize is well worth making the effort for.